The Competition and Markets Authority (CMA) is now seeking evidence
from academics and industry experts on the potential harms to
competition and consumers caused by the deliberate or unintended
misuse of algorithms. It is also looking for intelligence on
specific issues with particular firms that the CMA could examine
and consider for future action. The research and feedback will
inform the CMA’s future work in digital markets, including its
programme on analysing algorithms and the operation of the
new Digital Markets
Unit (DMU), and the brand-new regulatory regime that the DMU
will oversee.
Much of people’s lives is spent online, be it consuming news,
socialising, dating, ordering food, or arranging travel. Many of
these online activities and the markets that underpin them could
not exist without algorithms, often in the form of artificial
intelligence, and these have enabled considerable gains in
efficiency and effectiveness. However, they can negatively impact
consumers in various ways.
Algorithms can be used to personalise services in ways that are
difficult to detect, leading to search results that can be
manipulated to reduce choice or artificially change consumers’
perceptions. An example of this is misleading messages which
suggest a product is in short supply.
Companies can also use algorithms to change the way they rank
products on websites, preferencing their own products and
excluding competitors. More complex algorithms could aid
collusion between businesses without firms directly sharing
information. This could lead to sustained higher prices for
products and services.
The majority of algorithms used by private firms online are
currently subject to little or no regulatory oversight and the
research concludes that more monitoring and action is required by
regulators, including the CMA. The CMA has already considered the
impact of algorithms on competition and consumers in previous
investigations, for example monitoring the pricing
practices of online travel agents.
Kate Brand, Director of Data Science, said:
“Algorithms play an important role online but, if not used
responsibly, can potentially do a tremendous amount of harm to
consumers and businesses. Assessing this harm is the first step
towards being able to ensure consumers are protected and
complements our wider work in digital markets to promote greater
competition and innovation online.
“We want to receive as much information as possible from
stakeholders in academia, the competition community, firms, civil
society and third sector organisations in order to understand
where the harm is occurring and what the most effective
regulatory approach is to protect consumers in the future.”
This work is being led by the CMA’s Data, Technology and
Analytics (DaTA) unit, the largest team of data and technology
experts in any competition or consumer agency worldwide.
As well as playing a vital role in informing the work of the new
regulator, the DMU, it will play a key role in supporting our
wider Digital Markets
Strategy to protect consumers in dynamic markets online. The
CMA intends to work closely with the ICO and Ofcom, through the
Digital Regulation Cooperation Forum, in taking this work
forward.
For more information, visit the algorithms paper web
page.
